Thursday, January 17, 2008

Eying a bounce tomorrow

Unless you're an uber bear like Tim Knight you screen probably looked like a "baboon's ass" today. I share your pain. Although I'm making gains in my trading account, they in no way compensate for the losses in the portfolio I report here, which are much larger. That being said, I'm looking for a bounce tomorrow based on the VIX and put/call ratios both of which have spiked up.

Tomorrow is also option expiration day, so expect some fireworks. Below is part of a screen shot of SPX options traded on CBOE. Calls are on the left and puts on the right. The two right most columns are volume and open interest. You can see the volume and OI in puts far dwarf those of calls. If you subscribe to the idea that the market imparts the most amount of pain to participants then many put holders will be in a world of hurt tomorrow. 1350 is not out of the question IMO.